- Single currency gains on flagging ‘Buck’ – Concerns still present about Eurozone integrity
- Hawkish comments from Fed’s Mester – Worries of ‘Brexit’ impacts in the US grow
- US holiday incoming – Euro could advance on Independence Day
The Euro has managed to expand its gains against the US Dollar over the course of the day, on account of conflict between Fed policymakers.
While the Fed’s Vice Chair Stanley Fischer has warned that ‘Brexit’ may have had severe impacts on the US economy, fellow official Loretta Mester has conversely stated that a rate hike in the US should not be left for too long.
Looking ahead, July 4th is Independence Day in the US, which will limit any US data releases; as a consequence, the Euro could advance further against a static ‘Buck’.
(Last updated 11:28 July 1st, 2016)
The Euro has been a close contender against the US Dollar today, with the latest movements failing to extend away from opening levels.
While the US Dollar has been generally up against the Euro recently, it has fluctuated wildly elsewhere, on account of widespread uncertainty in global markets.
Eurozone Economic News: Manufacturing Positivity Fails to Maintain Euro Investor Confidence
The Euro has been on unstable footing on the last day of the week, having risen by a marginal amount against the US Dollar but fallen by -0.5% against the Australian Dollar (EUR/AUD) and -0.6% against the Japanese Yen (EUR/JPY). In more positive developments, advances of 0.3% against the Pound (EUR/GBP) and 0.5% against the Polish Zloty (EUR/PLN) have been recorded.
The generally unappealing state of the single currency today can be at least partly attributed to the fact that British Chambers of Commerce (BCC) Chief Economist David Kern has issued a gloom-laden forecast for the future of the Eurozone after ‘Brexit’, stating that:
‘Even before the British Referendum, Draghi and other senior officials signalled that the European Central Bank (ECB) may consider cutting rates further and adding to quantitative easing. The post referendum turmoil will intensify the pressure for additional stimulus, although the ECB is aware of the risks that such steps may entail, particularly if they worsen the squeeze on the profitability of the Eurozone’s banks. What must be particularly worrying for the ECB is that Brexit may damage the Eurozone economy even more than it may hurt the UK’.
In domestic news, manufacturing in June in the Eurozone rose overall, though France was the notable decliner in this field.
US Dollar also Unstable on Presidential Warnings for Global Economy
The ‘Buck’ has been an equally risky option for investors today, on account of recent slips in the outlook for the US economy.
One source of negativity for investors in the ‘Greenback’ has been President Barack Obama himself, who has stated that while in the short-term, the global economy is expected to ‘hold steady’, longer-term forecasts are far less solid.
More recently, Fed official James Bullard has stated that there is unlikely to be an immediate US recession, but the policymaker has nonetheless revised his forecasts down for future US growth.
Notable movements for the Dollar today have consisted of a tight trending against the Euro (USD/EUR), a rise of 0.4% against the Polish Zloty (USD/PLN) and a drop of -0.5% against the Japanese Yen (USD/JPY).
Future EUR, USD Forecast: US Manufacturing Stats and Construction Results due Today
The next data likely to affect the pairing will come from the US, in the form of the afternoon’s June ISM manufacturing result, which is currently forecast to remain at 51.3.
Out at the same time will be additional US announcements, including the May construction spending result that is expected to rise from -1.8% to 0.7%.
Current EUR, USD Exchange Rates
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1108 and the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.9005 today.